I made a post regarding my goals a couple of days back. I target to increase my Hive Power and my HBD in savings. It was very interesting to see in the comment section how many people wondered why I wasn't using my HBD to purchase Hive and then sell it when Hive goes back up. I don't do it because I learned the hard way that trading bothers me too much.
Learning the hard way in my youth
About 25 years ago, I was working for a Swiss Bank and I was a specialist for small company credits. I checked their numbers and decided whether they could get loans or not. In my spare time, I was trading on the stock markets. I was working with options and warrants and I have to say that it kind of drove me crazy.
When trading there is always your ego standing in the way and it was the same for me. I had my strategy that if a title I bought went 10% below buying price, I would sell it and I would double my position if the title went 10% up. These goals were great but it was so difficult to implement them. At the time, there were very few options to actually automatize the trading. Especially with options, even stop losses and limit orders didn't always work because there are market makers that might simply jump your orders. It meant that when I was trading, I had to be in front of the screen at all times and I always tried to close my position before the trading ended for the day. Even if I wasn't using big sums, a bad trade was enough to turn my mood south for the rest of the day.
As I said before, keeping my strategy was wishful thinking because it went against human psychology as trading goes in general. What happens when your position decreases by 10%? Your psychology wants you to keep it and hope that it goes back up. If it goes 10% over buying price, you just want to sell to realize a profit. However, I know that this wouldn't work in the long run and therefore I started to think that I knew better and I could just do as I felt and still make a profit. That's what I would call the ego trap which is very difficult to avoid. I probably had a positive trading balance at that time but the profits were never compensating for the stress and mood swings that the trading activity generated. It made me feel bad and I decided one day to change my strategy altogether. I stopped trading and decided to invest my money in dividend stocks. I bought the stocks and simply collected dividends over the years. That's also what I'm doing with crypto. I try to invest wherever I can get a return and I simply leave it there.
The hard truth about trading
For me trading is nothing else than a game of probabilities. At whatever moment in time a title has a 50% probability to go the way you want and a 50% probability to go the other way. You might get a little edge with chart analysis. So it's a game of luck and your biggest enemy is your own behavior and your ego. Both work against you and I believe that in the end they are not stronger than a possible edge that you would get from chart analysis. Then trading is not totally free. You have to pay fees in most of the cases to trade. This means that with a 50% probability of being right, you actually have less than 50% of generating a profit. Without a fully automated trading that takes the ego and the psychology out of the picture, trading is a losing game. I would say that you have the same probability to win as if playing the roulette in a casino.
Mixing up long term and short term strategies
If you trade it actually doesn't matter at all with what share or titles you trade. Your only aim is to sell higher than you bought. A lot of people are very much influenced by what they read and what they hear and they invest into something because they believe in it. However, with the first price drop, they will sell because they get scared. Markets always go up and down and they never go up in a straight line. So if you believe in something, make sure that you don't check the price every day. Just let it be and keep it in your wallet or your depot. If you believe in BTC, don't sell when prices drops below 50'000. Just keep them and don't beat yourself up about the price drop. If BTC is really as good as you believe, then it might go much higher.
Be it daytrading or long term strategies, I've learned that trading is bad for me and for my well being. So I simply stopped trading at all and I feel so much better. Of course, I still buy and sell stuff but it's not with the prospect to make a benefit from the transactions directly. I buy and sell because I have a long term strategy that aims to get as much return on my fortune as possible. If prices go up, of course I will be happy but if it goes down, I will still have the return from my investment in the form of interests and dividends and this makes me happy as well.
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That's a good strategy to avoid trading-induced stress. I still trade occasionally (mostly on Hive), but with so small amounts that even if it goes the other way I won't be affected emotionally. And usually, like on LPs, I prefer to trade between coins that I want to hold equally, like HIVE and HBD.
LP's are a great way to invest for me. I put in pairs like you where I don't mind ending up with either or the other token. It generates fees and I'm happy without stress :-)
I am a bit similar too.. Over time I realise I am bad at timing the market so I stick to investing for the long term. Of course, I still set aside a portion to trade for my personal excitement, but it's a bonus if there are any gains. Hehe!
!LUV
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Very interesting blog. Based on what you said, I agree, you should not be a trader. !LOLZ It will make you #TooFuckeh
Great that you have learned from your experience. Important to remember that we are all programmable devices. Also, more important, don't try and change the low level coding. People need to figure out how they are wired before playing a risk reward game. I think most people operate as you describe when it comes to making money from trading.
I don't do option trading, foreign exchange and I don't buy on margin. I have been trading stocks since 1980 and now that I have learned a lot from being on Hive I am having a great time playing with digital assets.
Fear and greed are two attributes that must be well managed in any risk and reward game. By any, I mean not just trading assets. Lots of people lose money and/or destroy their livelihood because of some business venture gone bad. They get into something they do not completely understand. People get fooled by hype and overlook the obvious.
C'est la vie! We are all players in a big game. Master the rules to excel at what it is you want from your game of life.
That's so true. Not everybody is good in everything. It's important to figure out what position we like to play and which ones to avoid :-)
Absolutely. Don't waste time on what you are not very good at when you can have more fun mastering what you can already do well. Maybe I can do some trading for you while you do some coding for me. I have a lot of ideas that need coding. !LOLZ
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I also avoid trading, I think it requires a lot of attention and a good deal of experience and insight into the market, but for me it's too much risk to try. Hive's safer model, which is posting, HBD in savings and some second-tier tokens, is much better for me to trust. Of course, anything can happen, good or bad, at any time 😄
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I think that trading can provide a lot of excitement and profits but not to everybody. Some of us are better off with the save hodling strategy :-)
I totally agree with you! 😀
That makes so much sense. I not a trader, it sounds all glamorous to make those big trading wins, but the grinding in front of the screen is anything but. Leverage is the biggest issue with trading, both for borrowers and those lending as losses pile up fast.
I didn't even go into trading with money from other people. I think that would have killed me. With options and warrants there are some leverage effects within the products that are by far enough "excitement" lol.
That's a good choice from my viewpoint tho. As I'm going in the same way too 🤣. But, the reason is different... I see trading as work and my goal is to let my money work for me so I can feel the same as yours like your last words in post, "I will still have the return from my investment in the form of interests and dividends and this makes me happy as well." !PIZZA
Well, before that I need to do everything I can do until I achieve it which is work. !LOL
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I definitely agree with that. You might work for your trades and often you even lose money in the procces...
I don't think trading is a complete losing game but it helps to set a plan and just act according to it. Personally, I prefer to zoom out and build a longer plan. I avoid taking a look at price until I get an alert. I do agree that it can definitely be a losing battle and it is risky.
People can make a lot of money with trading but it also costs a lot of nerves and not everybody wins :-)
Everyone learns that once - either the easy way or the hard way. 😎
I mostly hodl. Occasionally, but only on HE, I buy or sell something. But these are small amounts.
Hodl is what I was doing even before people were talking about it regarding btc. It's by far not the most efficient strategy but it's so much calmer and safer :-)
Yes, hodl is a kind of comfort zone 😃
You are so right and I can relate to your point of view. Trading is more or less like gambling and anything can happen. Controlling your emotions is yet another problem in trading. So I keep off, for my own peace of mind.
This is definitely a safer and more peaceful road to take :-)
Trading bothers me a lot too especially Forex but it’s crazy how I’ve gotten so used to it that I can’t do without trading
Forex trading is as good as any other form of trading. The psychological aspects are the same though.
You are right
Forex market can be exhausting
Peace
Not only forex but all markets are having the same effect on me :-)
!PIZZA
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